Question

In Common size Balance Sheet, percentage of various items is expressed as a percentage of:

• A. Total Assets
• B. Capital Employed
• C. Net profit before tax
• D. None of these

Hint:

Common-size financial statements present items as a percentage of total assets to enable meaningful comparisons regardless of company size.

Answer 1

The Correct Option is A

In a common size balance sheet, every item (both assets and liabilities) is expressed as a percentage of the total assets. This standardization facilitates easy comparison between companies of different sizes and across different periods by removing the scale factor. It helps analysts understand the relative weight of each component in the financial structure.